Why traditional auction houses find it tough online

Well, what a year. We’ve all finished 2020 in a rather different world to the one we started with – and we’re perhaps never going back to the old ways.

For many of us, working from home is now a well-established new normal, as is being able to order practically everything we need online. We have been luckier than most in that our business model, one that allows people to view and appreciate classic cars from a distance, proved to be such a winning formula that it led to a three-fold increase in business and a move this month to 13,000sq/ft premises simply to be able to accommodate the number of cars we’ve been asked to auction on a concierge (we do all the work) basis.

By utilising the many advantages of online selling, not least reach, accessibility, and lower selling fees we have proved that consigning, bidding and collecting cars can be very successfully done at a distance, whilst still offering personal viewings.

But we are not blinded to the traditional ways. There is still plenty of space for physical auctions, not least because they offer social opportunities.

Amazon was never a book seller, it was a tech company that went to a new market

Plenty of buyers are wedded to one format or the other; but most will follow their chosen car, however it is offered.

But we do think that the online and physical models are discrete, and that trying to mix the two risks generating confusion at best, and at worst, bankruptcy.

Take the case of a firm that runs a physical auction and would like to double up into cyberspace, too. There are many challenges, firstly that the company has always run at a cost-base tailored to taking at least 20 per cent of a sale in commission, an income that is vital to cover venue and back-office costs; suddenly running at a quarter of that income will be a great shock. The fundamental business models are different, and a company’s cost base is structured around one or the other.

And from the vendor’s side: why would a seller pay the extra commission to have their car sold face-to-face with that business when the prices paid by the buyer for like-for-like cars (including fees) are now evolving to be the same? Plus any online-only auction or retailer really needs top-flight technology skills more than they need decades of experience selling cars.

Why so? Well, Amazon was never an expert book retailer, it was a technology company that moved its logistical and coding expertise into other markets – and the rest is history. As a tech company you look to change the fundamental dynamics of a market, not just offer a different way of doing the same thing. After all, Airbnb would not be the success it is if it just offered a different way of booking a hotel room.

We too are primarily a technology company whose expertise enabled us to sell classic cars in an entirely new way; while we are driven by lifelong passion, this would have been useless without a leading auction platform and apps that majored on the advantages of online.

We have also started partnering with like-minded companies around the world, licensing our technology so you’ll be able to see The Market in Europe.

As for our domestic competition, it’s a great thing for customers; no-one should be complacent, and more players only forces the online model to evolve for the benefit of everybody. All we say is that new entrants should understand that conventional marketplace experience could count for little in the Brave New World we’re all facing.